Websites Vary Prices, Deals Based on Users' Information

It was the same Swingline stapler, on the same Staples.comSPLS2.72% website. But for Kim Wamble, the price was $15.79, while the price on Trude Frizzell's screen, just a few miles away, was $14.29.

A key difference: where Staples seemed to think they were located.

A Wall Street Journal investigation found that the Staples Inc. website displays different prices to people after estimating their locations. More than that, Staples appeared to consider the person's distance from a rival brick-and-mortar store, either OfficeMax Inc. or Office Depot Inc.ODP0.25% If rival stores were within 20 miles or so, Staples.com usually showed a discounted price.

What Price Would You See?

"How can they get away with that?" said Ms. Frizzell, who works in Bergheim, Texas.

In what appears to be an unintended side effect of Staples' pricing methods—likely a function of retail competition with its rivals—the Journal's testing also showed that areas that tended to see the discounted prices had a higher average income than areas that tended to see higher prices.

Presented with the Journal's findings, Staples acknowledged that it varies its online and in-store prices by geography because of "a variety of factors" including "costs of doing business."

For years, the Internet, with its promise of quick comparison shopping, has granted people a certain power over retailers. At the click of a button, shoppers could find a better deal elsewhere, no travel required.

But the idea of an unbiased, impersonal Internet is fast giving way to an online world that, in reality, is increasingly tailored and targeted. Websites are adopting techniques to glean information about visitors to their sites, in real time, and then deliver different versions of the Web to different people. Prices change, products get swapped out, wording is modified, and there is little way for the typical website user to spot it when it happens.

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SnapSafe; Home Depot; Rosetta Stone

The Journal identified several companies, including Staples, Discover Financial Services,DFS-0.84%Rosetta Stone Inc.RST2.11% and Home Depot Inc.,HD0.49% that were consistently adjusting prices and displaying different product offers based on a range of characteristics that could be discovered about the user. Office Depot, for example, told the Journal that it uses "customers' browsing history and geolocation" to vary the offers and products it displays to a visitor to its site.

Offering different prices to different people is legal, with a few exceptions for race-based discrimination and other sensitive situations. Several companies pointed out that their online price-tweaking simply mirrors the real world. Regular shops routinely adjust their prices to account for local demand, competition, store location and so on. Nobody is surprised if, say, a gallon of gas is cheaper at the same chain, one town over.

But price-changing online isn't popular among shoppers. Some 76% of American adults have said it would bother them to find out that other people paid a lower price for the same product, according to the Annenberg Public Policy Center at the University of Pennsylvania.

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Staples.com appears to tweak prices based on a person's proximity to rival stores. In Texas, Trude Frizzell, left, saw a discount on a Swingline stapler compared with Kim Wamble, right, just a few miles away.
Catalin Abagiu for The Wall Street Journal (2)

"I think it's very discriminatory," said Ms. Wamble, an insurance account manager in Boerne, Texas, who priced the Swingline stapler for the Journal this month. She was just 10 miles or so down the road from Ms. Frizzell, but she saw higher prices on the Staples website than Ms. Frizzell did for all five products tested. Items tested included a pack of Bic pens, a case of orange masking tape, a set of crimped-end mailing tubes and a big safe.

It remains unclear precisely what formula Staples used to set online prices. Staples declined to answer detailed questions about the findings. It told the Journal that "in-store and online prices do vary by geography due to a variety of factors, including rent, labor, distribution and other costs of doing business."

It is possible that Staples' online-pricing formula uses other factors that the Journal didn't identify. The Journal tested to see whether price was tied to different characteristics including population, local income, proximity to a Staples store, race and other demographic factors. Statistically speaking, by far the strongest correlation involved the distance to a rival's store from the center of a ZIP Code. That single factor appeared to explain upward of 90% of the pricing pattern.

What economists call price discrimination—when companies offer different prices to different people based on their perceived willingness to pay—is commonplace and can be beneficial. Movie theaters give senior-citizen discounts. One traveler's willingness to pay top dollar for an airplane seat might mean other people will pay less.

In other cases, though, shoppers can be the loser. That same airline might easily just pocket the big spender's extra money and leave other prices unchanged.

Of course, not all price differences are instances of price discrimination. Prices driven down by competition wouldn't generally be considered discriminatory, for example.

Basing online prices on geography can make sense for various reasons, from shipping costs to local popularity of a particular item. Some retailers might naturally cluster in specific areas as well—a prosperous suburb, say—boosting the competitive pressure to discount.

But using geography as a pricing tool can also reinforce patterns that e-commerce had promised to erase: prices that are higher in areas with less competition, including rural or poor areas. It diminishes the Internet's role as an equalizer.

In the Journal's examination of Staples' online pricing, the weighted average income among ZIP Codes that mostly received discount prices was roughly $59,900, based on Internal Revenue Service data. ZIP Codes that saw generally high prices had a lower weighted average income, $48,700.

Staples didn't comment on the income split beyond saying that the company offers a low-price guarantee.

Online businesses have experimented with tailored offers since the dawn of the Internet era. In 1997, a startup called Personify sold software that tried to personalize Web pages for shoppers. For example, people taking a certain path through a site could be tagged as price-conscious and be shown low-end items, said Eileen Gittins, Personify's former chief executive.

"The idea was more advanced than the technology could support at the time," said Ms. Gittins. Today she runs an online company, Blurb, that lets people make books using their own photos.

In 2000, Amazon.com Inc.AMZN-0.11% infuriated many customers when it sold DVDs to different people for different prices. Amazon called it merely a test and ultimately refunded the price difference to people who paid more.

In 2010, the Journal reported that Capital One Financial Corp.COF-0.25% was using personalization technology to decide which credit cards to show first-time visitors to its website. Recent Journal follow-up testing indicated that Capital One was showing different users different cards first—either those for "excellent credit" or "average credit."

Capital One says it gathers data about visitors while they are on its website and uses this information to suggest different products to them. "We do not use any of this data in credit decisioning or underwriting," a Capital One spokeswoman said. "We're making an educated guess about what we think consumers will like."

This year, researchers in Spain studied more than 200 online retailers and found a handful of examples of price differences—including at Staples within Massachusetts—that appeared to be based on location and other factors. Those findings suggest that Staples' price adjustments have been present at least since this summer.

It is difficult for online shoppers to know why, or even if, they are being offered different deals from other people. Many sites switch prices at lightning speed in response to competitors' offerings and other factors, a practice known as "dynamic pricing." Other sites test different prices but do so without regard to the buyer's characteristics.

To find differences that weren't purely the result of dynamic pricing or randomized tests, the Journal conducted preliminary scans by simulating visits from different computers to a variety of e-commerce sites. If a website showed different prices or offers, the Journal then analyzed the site's computer code and conducted follow-up testing.

The Journal's tests, which were conducted in phases between August and December, indicated that some big-name retailers are experimenting with offering different prices and products to different users.

Some sites, for example, gave discounts based on whether or not a person was using a mobile device. A person searching for hotels from the Web browser of an iPhone or Android phone on travel sites Orbitz and CheapTickets would see discounts of as much as 50% off the list price, Orbitz said.

Both sites are run by Orbitz Worldwide Inc.,OWW-0.35% which in fact markets the differences as "mobile steals." Orbitz says the deals are also available on the iPad if a person installs the Orbitz app.

"Many hotels have proven willing to provide discounts for mobile sites," said Chris Chiames, Orbitz's vice president of corporate affairs. Hotels on Orbitz mobile sites also offer discounts "that might target shoppers in a specific geographic region," as determined by the physical location of the user, as well as "other factors."

Often, sites tailored results by geography. In the tests, Discover, for instance, showed a prominent offer for the company's new "it" card to computers connecting from cities including Denver, Kansas City, Mo., and Dallas, Texas. Computers connecting from Scranton, Penn., Kingsport, Tenn., and Los Angeles didn't see the same offer.

A Discover spokeswoman said that the company was testing the card, but that for competitive reasons, it wouldn't comment further on its "acquisition strategy" for new customers.

At home-improvement site Lowe'sLOW0.73% Cos., prices depend on location. For example, a refrigerator in the Journal's tests cost $449 in Chicago, Los Angeles and Ashburn, Va., but $499 in seven other test cities. Lowe's said online shoppers receive the lower of the online store price or the price at their local Lowe's store as indicated by their ZIP Code.

Home Depot's website offered price variations that appeared to be based on the nearest brick-and-mortar store as well. A 250-foot spool of electrical wiring fell into six pricing groups, including $70.80 in Ashtabula, Ohio; $72.45 in Erie, Pa.; $75.98 in Olean, N.Y and $77.87 in Monticello, N.Y.

The company said it uses "IP address," a number assigned to devices that connect to the Internet, to try to match users to the closest store and align online prices accordingly.

Location also seemed to be important for some international companies. The Journal saw Rosetta Stone, which sells software for learning languages, offering discounts of as much as 20% for people who bought multiple levels of its German lessons from certain locations in the U.S. or Canada, but not others from the U.K. or Argentina.

Rosetta Stone said it sometimes tests and offers different product "bundles" in different places. It also personalizes its suggestions based on how the visitor gets to the site, Rosetta Stone said—whether from a search engine, a social-media link, a mobile device or a PC. "We are increasingly focused on segmentation and targeting," a spokesman said. "Every customer is different."

The differences found on the Staples website presented a complex pricing scheme. The Journal simulated visits to Staples.com from all of the more than 42,000 U.S. ZIP Codes, testing the price of a Swingline stapler 20 times in each. In addition, the Journal tested more than 1,000 different products in 10 selected ZIP Codes, 10 times in each location.

The Journal saw as many as three different prices for individual items. How frequently a simulated visitor saw low and high prices appeared to be tied to the person's ZIP Code. Testing suggested that Staples tries to deduce people's ZIP Codes by looking at their computer's IP address. This can be accurate, but isn't foolproof.

In the Journal's tests, ZIP Codes whose center was farther than 20 miles from a Staples competitor saw higher prices 67% of the time. By contrast, ZIP Codes within 20 miles of a rival saw the high price least often, only 12% of the time.

Staples.com showed higher prices most often—86% of the time—when the ZIP Code actually had a brick-and-mortar Staples store in it, but was also far from a competitor's store. In calculating these percentages, the Journal excluded New York City and used the more than 29,000 "standard" ZIP Codes in the 50 states and District of Columbia. This meant things like ZIP Codes with only post-office boxes weren't counted.

Prices varied for about a third of the more than 1,000 randomly selected Staples.com products tested. The discounted and higher prices differed by about 8% on average.

There were a few areas of the U.S. and its territories that offer exceptions. The Journal found that Puerto Rico was generally shown the higher prices no matter how close the ZIP Code was to local OfficeMax or Office Depot outlets. For Guam, on the other hand, tests of Staples.com almost always returned the lower prices, even though the nearest U.S. OfficeMax or Office Depot is listed online as being in Hawaii, nearly 4,000 miles away.

New York City, too, appeared to be a special case. Tests of Staples.com using ZIP Codes in the boroughs of the Bronx, Manhattan and Staten Island consistently saw higher prices, while Brooklyn and Queens saw almost only the discounted prices. This despite the fact that all parts of New York City look to be within 20 miles of a Staples competitor, according to the websites.

As a final test, the Journal ordered two separate Swingline staplers from Staples.com, from two nearby ZIP Codes—one costing $14.29 and the other one $15.79. The staplers arrived the same day. They appear to be indistinguishable from one another and do an equally thorough job of stapling.

It has been said that if people want to really get upset and paranoid about Internet surveillance, that government (NSA) surveillance is miniscule compared to business surveillance as this article touches the surface on. Also, I read that online marketers charge you more if you are ordering from an Apple computer than a PC. They even can tell what kind of computer your are ordering from ! This is something to get paranoid and inflammed about, much more than government hyped-surveillance.

Interesting, that WSJ online offers different subscription prices for people in different locations and subscribing through different devices. I was quoted myself one price online, another by phone and on iPad it was different again. I believe this is also discriminating pricing provided that an online subscription should not be different depending on location. Will this cost differently to WSJ if a person accesses WSJ from Tokyo or from NY?

"Office Depot, for example, told the Journal that it uses "customers' browsing history and geolocation" to vary the offers and products it displays to a visitor to its site."

Could the Journal please elaborate on how companies use "customers' browsing history" to determine the price it will offer to a consumer? Is this restricted only to browsing within the company's website or all browsing history?

I wonder if, as these revelations become increasingly public both on the internet and local news channels, that entrepreneurial types will start creating websites that will route your purchase through the "lowest-priced" region. For example, the site could maintain proxy servers with IP addresses in the zip codes identified as being cheaper. While this isn't worth it for a stapler, I could see it gaining greater traction for big ticket items like TVs, computers, and safes, as in this article. That's the beauty of the internet - with every change to the system, someone will find a way to adapt.

It's not valid to compare this practice with differences among bricks-and-mortar establishments. The "gas station one town over" may have significantly different distribution costs, buy at a different volume from the wholesaler, whatever. It's not apples-to-apples. If I don't like the price at a particular store, I can drive to a different one.

I can accept that there's some logic for hotels to lure walk-ins using mobile discounts; but if I'm sitting in my living room, shopping online, I have no options - I'm not going to move to a different zip code to get a discount on something, and the price I see online is being dictated to me. I can't effectively counter, unless I'm shopping on EBay. We have no bargaining power in this exchange - it's a take-it-or-leave-it pricing model. For this reason, from the consumer perspective, I really hate this tactic. Unless it's going to cost Staples (or whomever) more to ship something to me than to someone in the next town, we should be offered the same price.

I find it interesting that right up front the article mentions race (ah, the race card) as an exception to the list of factors considered. Wait till some bright bulb maps race to zip code and discovers the correlation with higher pricing... then the fur will fly. We shouldn't need to use race (or any other arbitrary characteristic) to bring forward the fact that this is just wrong.

It's only a matter of time until shopping-bots up the ante by using IP-spoofing or somesuch to truly get "the low price" for the consumer. All this cat-and-mouse ^#$*&^ must add frictional costs to everything; so in the end, we [consumers] all lose.

"In the Journal's examination of Staples' online pricing, the weighted average income among ZIP Codes that mostly received discount prices was roughly $59,900, based on Internal Revenue Service data. ZIP Codes that saw generally high prices had a lower weighted average income, $48,700."

Not surprising in the least. The statistical sample showed a 90% correlation (the article didn't discuss the R-squared, so I'll assume that the value is statistically relevant or it wouldn't have been used) between ZIP code and pricing. It's safe to say that lower income areas also have fewer retail establishments.

Additionaly, don't confuse price with cost. Cost is the total outlay to obtain and use the product, price is just a small component involved that represents the product by itself. The price may be $1 different between the two staplers, but the cost savings between the two is the delta between the price tag in the store, the time otherwise used to get to and from the store, and the gasoline required to get there and back.

"How can they get away with that?" said Ms. Frizzell, who works in Bergheim, Texas.

What do you mean, you want a law to prevent companies from engaging in competitive pricing strategies? I have no problem with this. Let the markets decide whether the price is appropriate. Markets are segmented and there are many variables that would affect the price an arm's length buyer would be willing to pay.

You can mess with these things and maybe get a lower price. Once it figures out who you are just look at something or put it in and out of your cart and then watch your e-mail for a week or so for a better price. Remember though whatever you do it will figure you out.

They call it Competitive Free Enterprise, a term virtually unknown in America. This is where you can charge what you want, buy what you want, determine a price level and the winne4rs succeed and the loser fade. Anyone can enter the Free Market on both the buy and sell side. What a concept. Possible America's economic and financial problem could be solved by trying it out instead of the smoke and mirrors, hocus pocus, multiple propensities to obfuscate ignorance, animal spirits and other1937-styldr nonsensical economic and financial theory taught and practiced today in order o to make easy jobes for those who can't do.

Price discrimination can be good! The problem with price discrimination is that it is set unilaterally by the seller, and imposed on the buyer, on a take it or leave it basis. But such discrimination can be economically optimal. That is why it is widely used in the hotel, airline, and car rental businesses, and moving into e-commerce. Buyers do live with it -- but with considerable resentment. I suggest the way to make it acceptable to buyers is to involve them in the pricing decision.

That is one of the key features of a new pricing method called FairPay. FairPay sets prices based on a dialog with the customer, and uses Internet tracking of such prices to manage fairness over a long-term customer relationship. With FairPay, customers have significant participation in pricing, and can be asked by sellers to include a dynamic premium (such as for peak time surges, or remote locations, or affluence -- but they can decide just how extreme that premium should be. Sellers get to determine if the buyer is generally being fair about that, and continue to allow FairPay pricing in the future to those who are reasonably fair.

While current forms of discrimination seem unfair and manipulative, I view this as setting the stage for newer and better pricing strategies. As described in my FairPayZone blog, such "discrimination" can be good, when done within reason, at agreed-upon levels, based on mutually understood reasons.

The other day, I was in my local Walgreens B&M store looking at silicone ear plugs. I saw that the well known Mack's brand was selling at $5.99 for 6 pair. Walgreens house brand was selling for $5.49 and they had a sign trumpeting the Walgreens 50 cent saving. Wow.

However, I thought $0.91 to $1.00 per pair pair (between the two brands) of cheap ear plugs was a bit high and since I have a smartphone, I decided to scan the barcode on the Mack's package using an app called Shopsavvy and check if there were better prices. I was surprised to see that many of the online prices for this ear plug brand were around mid $3. In fact, Walgreens own price online was $3.69, a full $2.30 cheaper than the in-store price! Whew.

I spoke with the store manager but he had no idea why the B&M price was so much higher than the online price. I followed up that conversation with an email to Walgreens corporate requesting an explanation (about 7 days ago now) but have yet to receive a reply.

So I wandered over to the CVS store across the street and what did I find but CVS brand silicone ear plugs priced at 8 pairs for $4.79 (~60 cents per pair, which was lower than even Walgreens online price. So I brought them.

You don't understand economics or capitalism if you are confused why companies charge different prices based on the value of the product you are providing against the competitive/opportunity cost. If I was selling the only Swingline stapler you could buy, I'd probably charge $100.

Here is an idea for a startup. Collect the kind of information that was collected in this article. Find the ZIP codes where the lowest prices are offered. Then offer a Virtual Private Network (VPN) service that will make the user appear to live in those ZIP codes. There are VPN services today that can make it appear that you live in a different country, so doing a ZIP code would be trivial.

Of course the ZIP codes will have to be changed from time to time as merchants change their strategies, but still, it's an interesting idea.

This is far from sinister, and I'm surprised it made the front page. Online prices at bricks-and-mortar retailers are most often simply set at the shelf prices at the nearest local store, with a few exceptions on things that are extraordinarily expensive to ship. So if you "select my home store" at any of the site, you're seeing the shelf (and online) price for each SKU. If you don't select your home store, the site takes a best guess at your location and sets prices there.

To those that "spoof" your location elsewhere, more power to you! It's simply the offline equivalent of driving out to a different store, where prices may be somewhat different. My firm optimizes pricing for a number of different retailers, and I can say that almost every one has capacity for different store-level pricing. But to be clear, it's rarely a huge difference- within 10% is the norm.

While I understand that it may be concerning that your rural cousin can browse the same website for the same product and get different prices, it's no different than had you both driven to the same chain and picked them up off the shelf.

Excellent , unbiased in-depth report. Readers can draw their own conclusions about fairness, privacy and retailing and whether or not it's important information. But from a reporting standpoint it shows the WSJ is still serious about journalism. Well done. Can't wait to read about the new "start up" site designed to fool the retailers' sites to find the best deal.

This pricing strategy is not that troubling. What is troubling is the vast amount of information that is shared online without specific approval by the owner of the computer or data. The zip code of my house vs. my credit card is different if a business address is used. The zip code of the location where I'm ordering (say in an airport) may well be different than my home address.

This strategy will lead to additional, intrusive software to combat the location scheme and millions more "shopping-bots" will be unleashed to assure a better price. Is this technology really productive to the company or the consumer. If a stapler sells for $14 then the price discrimination is (or should be) the shipping cost. If a retailer is spending more for a Stapler based on location then they have more serious problems in the supply chain.

I'm not sure how offering higher prices to areas of lower income increases sales. Nor am I sure how offering lower prices to more affluent customers maximizes profit. The only way I see this works is if stupidity is inversely proportional to income.

Lots of companies have been doing the same thing internationally for years. Personally when I shop on the internet in the US I proxy in to make sure my IP looks as though it is coming from inside the US. The savings are substantial, in some cases up to 50% Sites like myus,com provide a great service to savvy international customers to complete the transaction,.

I just love some of these comments. Some folks appear to feel like that they are ... wait for it ... e-n-t-i-t-l-e-d to some arbitrary price that was offered to another buyer. Sorry, but you're not. Because somewhere, at some store, or online, some item is on sale, marked down for clearance, or priced for untold other numerous possible market reasons and, you ... are ... not ... there. Oh the humanity.

Some people in this modern day and age still just don't get it that we now live in a defacto global free market, and that the best price you get is the best price that you find. Because to whoever is selling a product or service, you are in competition with millions of other consumers. Some will agree to pay more, and some will hold out to pay less. It all comes out in the balance of supply and demand.

I suppose some would prefer that all like goods and services be sold at the exact same price in every place at the same time. I think that system has been tried, and failed miserably.

Airlines do it all the time. Stores do it in the bricks-and-mortar world and always have. Franchises operating under a banner need ways to equally allocate web sales. There's nothing unusual or unfair about it.

Years ago Victoria's Secret was outed for sending different catalogs (with different prices) to different customers. Internet tracking makes it easier to tailor offers. Maybe the key is, don't buy the first offer. Let the site track your ambivalence and wait for it to sweeten the deal, or don't buy there at all. For < less than a dollar on a stapler, though, it would take too much time.

Well, ladies. Engage in the std and time honored American behavior and sue 'em for megabux, alleging lethal emotional stress. I'm sure you can easily find some lib 'judge' whose shoulder you can cry on. He'll help you out.

my firm represented a "gentleman's massage parlor" in court for 3 years; their parking attendant would signal the front desk girl to tell her what sort of car the customers had driven up in; that, more than anything else, would determine the prices they were quoted

if a dumb hooker can figure it out, a collection of MBAs should be able to also

Google cannot tax you and by that magnify its capability to use your data against you. The government can and does.

Amazon can try to hide its methods from you (classify it) but being subject to search and seizure like you and me decreases its ability to use your data against you. The government can and does classify its methods.

Microsoft does not have armed agents which it can use to enforce its use of your data against you. The government does and does already use them.

You are wrong.

I've been upset about internet providers' abuse of our private data. But am far more alarmed by the government doing much, much more data collection and analysis than private providers could ever hope to with incredible magnification of the ability to do harm with that data. You need to pull your head out of the sand. First they use that data to harass people you don't like. Eventually they will use it against you.

You are very correct; stores have absolutely no obligation to offer goods at the same prices. However, with that being said, there is a high potential for this to backfire such as if a start-up offered a way to view all the discriminatory prices.

If customers became aware, on a real-time basis, that they are being taken advantage of their relationship with the store would be hurt and they may stop shopping there. The extra $1 or $2 could be great for the short-term but hurtful for the long-term.

If I recall correctly, “the different price based on what I think you can pay” is the pricing model most stores had before innovators like JC Penny and Wal-Mart came around and offered the lowest price to all customers. Amazon, with all its amazing technology and capabilities, would be very smart to cement its dominance in the e-commerce area by promising to offer the same, lowest price to all customers. No one would even think to deal with a company like Staples that wants to take advantage of you if you knew Amazon wouldn’t. With online shopping it is very easy to “store hop.”

I just want to clarify one detail: We *did* look at race to see if it was correlated with price. Ultimately, it wasn't one of the factors that was strongly correlated. Income was correlated to some extent, and distance from competitor stores was correlated most strongly. It's not that we left race out of our tests.

Thanks for your insightful comment. It wasn't surprising to us, either, that the lower-income areas had fewer retail stores and saw higher prices, given the way in which Staples appears to be setting its online prices. We did try to state that:

But using geography as a pricing tool can also reinforce patterns that e-commerce had promised to erase: prices that are higher in areas with less competition, including rural or poor areas."

But I do agree 100% that it's important to reiterate.

If you're interested in the specifics of the statistics: The Pearson's product-moment correlation between "a ZIP code being within 20 miles of a competitor" and "a ZIP code receiving the high price less than 40% of the time" is 0.91 with a p-value less than 2.2e-16.

Also, I'd like to reiterate that we purchased two of these staplers from the Staples website from the same office, connecting via computer servers that had IP addresses in two different but nearby ZIP codes. (Large businesses sometimes servers in multiple locations, for example, so this isn't that strange.) The staplers shipped from the same warehouse, arrived the same day, etc. but had a different price. There was no difference in this case in terms of consumer travel time, gas usage, etc.

It appears that this is an artifact of discounting prices when in proximity to a competitor. Stores are likely to congregate in areas where they are likely to see more sales -- urban business areas and affluent places, for example. But when they congregate there, their competition with each other drives prices down. So those more affluent locations actually see lower prices.

It sounds strange, but this type of thing has been recorded by economists for quite a while in the real world.

In poorer areas the business has to price in a shoplifting factor. Or for enhanced security. Or for higher turnover among employees. Imagine yourself owning a business and wanting nicer items in your own life. You set the price that maximizes your ability to attain your wants and needs.

I suspect the massage parlor was pricing the opposite way of these retailers. While the retailers changing their prices inversely related to the customer's car price, I suspect the massage parlor was charging a price directly related to the cost of the customer's car. The fallacy of this is that some people wrap up all their disposable income in their car while others buy the least expensive car that gets them where they need to go so that they can invest their cash in something that doesn't depreciate.

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